The Office of Chief Administrative Hearing Officer (OCAHO) issued another decision arising case out of Buffalo, New York wherein it upheld most of Immigration and Customs Enforcement’s (ICE) proposed fine of $5329.50. See U.S. v. Hair U Wear, LLC, 11 OCAHO no. 1268 (2016). The case is similar to the earlier Buffalo case, Golden Farm Market.

Allegations

Hair U Wear, a very small business, received a Notice of Inspection (NOI) from ICE in January 2014. After not timely preparing four I-9 forms and failing to prepare two forms, a Notice of Intent to Fine was issued. Hair U Wear denied all allegations and did not raise any affirmative defenses.
Of the four allegations related to not timely preparing I-9 forms, each reflected there was no date in either Section 1 or Section 2 after the signatures. Furthermore, all of the I-9 Forms used the March 8, 2013 edition even though the first day of employment for each employee was listed as October 1, 2003, October 1, 2006, April 1, 2008, and April 12, 2012. This is obvious evidence that the I-9 forms were prepared well after the employees were hired.

Appropriate Penalties

ICE asserted the appropriate penalty was $5329.50 based on a 100% error rate – which equals a fine of $935 per violation. ICE mitigated the fine by 10% based on the mitigating factors of a small business and no employment of undocumented workers. It aggravated the penalty by 5% due to the seriousness of the violations. These mitigating and aggravating factors led to a fine assessment of $888.25 per violation.
ICE provided reports reflecting that Hair U Wear reported employing six employees in 2013. Hair U Wear did not dispute this fact. Hair U Wear did not provide I-9 forms for two individuals listed in the reports and conceded it prepared the other four I-9 forms after the NOI.
Concerning the five aggravating / mitigating factors, OCAHO agreed with ICE’s use of three of the five factors, but added a third mitigating factor, lack of prior violations. Concerning the aggravating factor of seriousness, OCAHO cited prior caselaw which states the failure to prepare or timely prepare I-9 forms is a potentially serious violation because the employer has not ensured the individuals are authorized to work without completing the I-9 form. Through the use of these factors, the baseline penalty of $935 was reduced by 10% to $841.50 per violation. Thus, OCAHO found the total penalties should be $4776.50.

Takeaway

As is usually the case, if Hair U Wear had conducted an internal I-9 audit before the NOI, it would have realized it did not have I-9 forms for its employees and sought to resolve the issue. As you can see by this case, even very small employers can face penalties assessed by ICE.

The Office of Chief Administrative Hearing Officer (OCAHO) issued its fifth substantive decision of 2015 finding that the company in United States v. Liberty Packaging, Inc., 11 OCAHO no. 1245 (2015), committed numerous I-9 violations. The proposed penalty by Immigration and Customs Enforcement (ICE) was lowered from $19,354 to $11,700.

When ICE served a Notice of Inspection (NOI) on Liberty Packaging, it also provided the company with a sample copy of the current I-9 form surreptitiously marked with the letters “ICE”. It was later revealed to OCAHO that the surreptitious marking of that sample form is a tactic used by ICE to detect if employers backdate I-9 forms. In this case, it worked.

Without having legal counsel, Liberty Packaging submitted 21 I-9 forms to ICE. After reviewing those forms, ICE issued the company a Notice of Intent to Fine (NIF) in March 2013. Liberty Packaging then submitted a “different” set of I-9 forms with an explanation that they were the “correct ones”.

Of the 21 forms originally submitted in the first set, 17 contained the surreptitious “ICE” mark indicating they were backdated. Thus, ICE set a baseline penalty of $935 per violation and aggravated the penalty by 15% due to the company’s bad faith, the seriousness of the violations and the presence of unauthorized workers.

It was discovered that a Human Resources manager at Liberty Packaging dated I-9 forms with the correct month and day of hire, but not with the correct year. Some of the forms were backdated between two and 20 years. As a result, there were many instances where the company used a newer version of the I-9 form which was not even in existence at the time of the employee’s hire.

On the issue of different sets of forms, OCAHO cited well-established case law holding that the I-9 forms to be considered were the first set of forms the company provided in response to the NOI –not the second “different” set of forms the company submitted at a later date. OCAHO found that Liberty Packaging had committed “systematic and deliberate falsification” in Section 2 of the I-9 forms, which “cannot be said to indicate good faith.” It noted that the company’s Human Resources manager had eight years of experience which presumably meant they had “some expertise” in handling I-9 responsibilities.

Concerning ICE’s proposed penalties, Liberty Packaging asserted that it was a small mom-and-pop business and expected to lose between $250,000 and $300,000 in 2013 (although the company failed to provide any documentation to support this assertion). The company argued that a $19,000 penalty would severely impact its ability to stay in business.

Furthermore, the company was successful in arguing that ICE failed to prove five employees were unauthorized. ICE merely offered proof that they were listed on the Notice of Suspect Documents which is insufficient to establish unauthorized status.
OCAHO found the proposed penalty should be adjusted to an amount closer to midrange, and reduced it to $650 per violation – an amount that “does not appear disproportionate to Liberty’s resources.” The penalty was reduced from $19,354 to $11,700.

Take Away

The most obvious take away is do not backdate the I-9 forms as it only exacerbates the employer’s liability. Second, submit the correct I-9 forms when responding to an NOI because later filed I-9 forms will not be considered. If this employer had engaged in preventive measures, such as hiring an attorney to conduct an I-9 audit, it could have avoided much of its liability.

A copy of the decision is available here. Cite as United States v. Liberty Packaging, Inc., 10 OCAHO no. 1245 (2015).